SPOT GOLD CONTINUES TO WEAKEN AFTER THE FED’S LATEST POLICY DECISION

Spot gold remained under pressure following the U.S. Federal Reserve’s latest policy decision on Wednesday, with the precious metal falling to its lowest level in more than a month. The main pressure came from a stronger U.S. dollar and expectations that interest rates will stay higher for longer, as the ongoing conflict in the Middle East and elevated oil prices continue to fuel inflation concerns.

During the U.S. trading session, spot gold dropped sharply by 4% to $4,817.20 per ounce, after earlier hitting its lowest level since February 6. This move suggests that the market is still reacting negatively to the combination of high interest rates and a strong dollar.

U.S. Dollar Strength Reinforced

The Fed kept interest rates unchanged, in line with market expectations, while emphasizing that inflation remains elevated and offering no clear signal on when the next rate cut may come. Although economic projections still point to the possibility of one rate cut later this year, the degree of certainty remains low.

Fed Chair Jerome Powell also noted that current projections are largely “speculative” amid growing uncertainty stemming from the Iran conflict. He signaled that the Fed is staying on the sidelines and is not yet prepared to take aggressive action. These mildly dovish remarks were not enough to support risk assets, including gold, which is increasingly trading more like an asset sensitive to monetary policy than a traditional safe haven.

Inflation Concerns and the Impact of War

Oil prices have surged due to geopolitical tensions, continuing to add pressure to global inflation, with Brent crude holding above $100 per barrel. Higher energy costs are expected to spill over into broader price levels across the economy.

Higher inflation means the Fed has less room to ease monetary policy. This creates direct pressure on gold, as the precious metal offers no yield and becomes less attractive compared to income-generating assets in a high-interest-rate environment. Although gold still retains its safe-haven role, monetary factors are clearly having a stronger influence on price action at this stage.

Technical Analysis: Downside Momentum Still Dominates

From a technical perspective, gold has just recorded a sharp decline of nearly $200 per ounce, while also breaking below the key support zone marked by the 50-day EMA on the daily timeframe. This development further reinforces the view that the current corrective downtrend is still in progress.

In terms of wave structure, gold is clearly showing a move from wave B to wave C. In situations like this, price action typically unfolds as an initial sharp decline, followed by a technical correction, before continuing with another leg lower. Given this pattern, prioritizing trades in line with the main trend which is currently bearish remains the more appropriate short-term approach.

The nearest downside target for gold lies around $4,760 – $4,805 per ounce, while a deeper support zone could come into focus at $4,650 – $4,685 per ounce if the downward momentum continues to hold.

Conclusion

Following the Fed’s rate decision, gold remains under pressure from the high-interest-rate environment and the strength of the U.S. dollar, while safe-haven demand driven by geopolitical tensions has not been strong enough to reverse the trend. From a technical perspective, the break below key support levels is further reinforcing the bearish correction scenario.

In the short term, the downtrend remains the dominant theme until the market shows a clear reversal signal. The support zones below will play a key role in determining whether the current correction is only temporary or is expanding into a deeper bearish cycle.

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